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SystemsResearchandBehavioralScienceSyst. Res.18,137 1̂58 (2001)

& ResearchPaper

Intelligent Organizations: AnIntegrative Framework

Markus Schwaninger*

University of St Gallen, St Gallen, Switzerland

The purpose of this paper is to demonstrate how cybernetic theories open new pathstowards organizational intelligence. This is illustrated by means of three theoreticalmodels from organizational cybernetics. These models are integrated into a frameworkfor a virtuous design, (self-)control and (self-)transformation of organizations. It isproposed that changes in activities, structure and behaviour ± three of the dimensions ofthis framework ± have to be synchronized among one another, and aligned with a fourthdimension: fundamental parameters such as organizational identity, ethos and vision. It isalso claimed that a continued and integrative application of the models outlined can tracethe path towards excelling organizational intelligence more effectively than merelypunctual uses of one or more of them. Copyright # 2001 John Wiley & Sons, Ltd.

Keywords Intelligent organizations; organizational cybernetics; self-control; self-transformation

1. THE QUEST FOR ORGANIZATIONALINTELLIGENCE

The ubiquitous complexity, speed of change anduncertainty lend credit to those who denote ourtime as `turbulent (Drucker, 1980) or even speakof the `age of chaos' (Abraham, 1994). In thiscontext, not only private ®rms but also organiza-tions of the public sector and non-pro®t organi-zations of all kinds face enormous challenges.

Accordingly, practitioners and researchers ofmanagement have produced new concepts, reci-pes, models and methods at an accelerating rate.Organizational learning and knowledge creation areonly two key terms to subsume much of thiseffort.

It may seem paradoxical, but the faster thechange they confront, the more managers needdurable concepts to contend with that change; themore variable the phenomena faced, the morevital knowledge about the invariants underlyingthe apparent chaos becomes. This is the essenceof being ahead of change ± which according toPeter Drucker, the Nestor among the manage-ment thinkers, is the only way of coping withchange effectively (Drucker, 1999, p. 73).

In this situation, the potential contribution ofthe systems approach to management researchand practice turns out to be enormous; eventhough this is not yet widely known or under-stood (cf. Beer, 1988; Espejo et al., 1996). Namely,the cybernetic stream of systems research hasdeveloped powerful theories and models toenable an effective design, control and transfor-mation of organizations of all kinds.

Received 7 August 2000Copyright # 2001 John Wiley & Sons, Ltd. Accepted 30 November 2000

* Correspondence to: Markus Schwaninger, University of St Gallen,Dufourstrasse 48, CH-9000 St Gallen, Switzerland

Systems theories and cybernetics haveinquired into the adaptation and learning oforganisms and social systems for several deca-des (for an overview, see FrancËois, 1999). Adap-tation has usually been conceived as passive, e.g.as `the process of accommodating to change'(cf. UNESCO-UNEP, 1983, p.5). Systems thin-kers have introduced an understanding ofreciprocity, which implies that a system and itsenvironment affect and change each other (e.g.Ashby, 1965, p.58, Ackoff and Emery, 1972,p.123f.)1.

Similarly, the concept of learning comes from anotion focused on the acquisition of knowledgeand skills (UNESCO-UNEP, 1983), rooted inpedagogy and developmental psychology (e.g.Piaget, 1967)2. Later, in the context of systemsresearch the aspect of knowledge acquirementwas extended to that of knowledge creation(Nonaka and Takeuchi, 1995) and linked toaction: learning was framed as a system'senhancement of its potential for effective action(in extension of Senge, 1992). Grounded in thistradition, a concept of the intelligent organiza-tion has emerged, which integrates these aspectsof adaptation and learning with those of self-reference, (self-)transformation, (self-)renewaland ultimately (self-)transcendence3.

From a cybernetic stance, the basic facultieswhich distinguish intelligent organizations are4:

(1) to adapt, i.e. to change as a function ofexternal stimuli;

(2) to in¯uence and shape their environment;(3) to ®nd a new milieu, if necessary, or to

recon®gure themselves virtuously with theirenvironment;

(4) to make a positive net contribution to theviability and development5 of the largerwholes into which they are embedded.

As social systems are at stake here, this set ofcapabilities goes far beyond the criteria of intel-ligence as established by psychology (Sternberg,

1987). It also transcends those theories ofmanagement, in which organizational perfor-mance is conceived and measured in terms ofcriteria such as pro®t, ef®ciency or shareholdervalue only.

Such a broader view promises to lead to bettermodels and ultimately to better management.The foundation for this bold assumption lies inthe Conant±Ashby theorem: `Every good regu-lator of a system must be a model of that system'(Conant and Ashby, 1981). In other words, theresult of a management process cannot be betterthan the model on which it is based, except byaccident. The term model is used in a broad sensehere, to include theories, frameworks and mentalmodels.

The purpose of this paper is to contribute tobetter management by leveraging availablemodels of organizational cybernetics, integratingthem into what I call a Framework for IntelligentOrganizations.

2. THREE THEORETICAL MODELSTO SUPPORT ORGANIZATIONALINTELLIGENCE

The fundamental characteristic of complexityinherent in all kinds of social systems hastriggered efforts to know more about (a) the setof parameters which substantially impinge on asystem's patterns of behaviour, and (b) thesubset of design parameters and control vari-ables, and their interrelationships, by whichthese patterns of behaviour can be shaped6. Inthe domains of organization and society, theseefforts have been focused on gaining bettermodels that capture the structures or generativemechanisms underlying system behaviour, andevoked insights for better system design and(self-)control.

I shall draw on three theories from organiza-tional cybernetics which have opened newdimensions in this endeavour:

(1) the Model of Systemic Control (MSC);1This is also the crucial principle underlying the more recent conceptof coevolution.2For Piaget, a biologist by training, learning is essentially a (biological)process of adaptation.3For an overview, see MuÈ ller-Merbach (1999) and Schwaninger (1999).4Schwaninger (1998), in extension of Sternberg (1987).5One could also use the term sustainability here.

6Cf. Ross Ashby's concept of `essential variables' which were meant tobe indicators of viability, or at least of actual survival (Ashby, 1965,p. 42).

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138 Markus Schwaninger

(2) the Viable System Model (VSM);(3) the Team Syntegrity model7 (TSM).

My proposal is that integrating these theories canprovide a systemic framework for the develop-ment and learning of organizations whichenhances organizational intelligence (as de®nedin section 1) more than isolated uses of one ormore of them.

Hereafter, the three theoretical models namedabove will be outlined. All of them have beendescribed and underpinned extensively else-where. But only little has been done to integratethem. However, such an endeavour seemspromising. A ®rst attempt at integration is themain contribution of this article, because thesetheories are complementary and, in principle,highly synergetic:

(1) The Model of Systemic Control furnishes aframework for a comprehensive (self-)con-trol of the activities of an organization toenhance its ®tness.

(2) The Viable System Model addresses issues ofdiagnosing and designing the structures of anorganization for viability and development.

(3) The Team Syntegrity model provides a struc-tural framework for developing interactivebehaviour in an organization so as to fostercohesion, synergy and knowledge creation.

The beauty of all three theoretical models lies inat least two characteristics they share: ®rst, theyare based on insights about invariant features oforganizations, which generate patterns of beha-viour, which can be anticipated and twentyin¯uenced proactively; second, these modelsare linked by an inherent, cogent logic, which,however, I shall only elaborate after havingexpounded each one of them (section 6).

In relation to the complexity of the events thatcontinually occur in organizations, these featuresare relatively simple, i.e. they embody a degreeof complexity which can be handled by the actorsdesigning those systems. In this sense, my paperaddresses both

(1) the simplicity of complexity (i.e. the invariantcharacteristics of behaviour patterns), and

(2) the simplicity underlying complexity (i.e. thecomprehensibility of structural featureswhich bring about complex events).

Substantial empirical evidence corroborates theeffectiveness of each one of these models. Therespective sources cannot be reviewed exten-sively in this paper. However, I shall cite a subsetof references which can furnish some supportand which are relatively easy to trace:

* for the MSC: Schwaninger (1988, 1989, 2000);GaÈlweiler (1990);

* for the VSM: Espejo and Harnden (1989);Espejo and Schwaninger (1993); Espejo et al.(1996);

* for the TSM: Beer (1994b); Truss et al (2000);Schwaninger (forthcoming).

3. THE MODEL OF SYSTEMICCONTROL (MSC)

Organizational cybernetics conceives manage-ment in terms of coping with complexity. TheModel of Systemic Control speci®es and inter-relates the control variables which are necessaryand, in principle, suf®cient to deal with thatcomplexity.

The cybernetic concept of control embracesregulation and steering of a system in order toachieve its purpose or goals, or in a more limitedsense to carry out its tasks or activities (what ithas to do or what it does). The cybernetics ofsocial systems emphasize intrinsic control8 asopposed to extrinsic control (cf. Geyer and vander Zouwen, 1978, Vol. 1, p. 2; Schwaninger, 1996;Espejo et al., 1996).9

Effective (self-)control implies a dynamic equi-librium, at a satisfactory level of performance,between a corporation (or an organizational unit)

7As the materials of TSI ± Team Syntegrity Inc., Toronto ± whichmakes the Team Syntegrity protocols available to organizations, referto Team Syntegrity as a methodology, the word `model' which I use inthis context is not capitalized.

8The terms intrinsic control, eigen-control, auto-control and self-controlare used synonymously.9If Heinz von Foerster (1984) designates social systems as observingsystems as opposed to observed systems, he thereby addresses suchaspects as self-control, self-reference, self-organization and self-transformation ± which are among the main concerns of organiza-tional cybernetics (cf. Schwaninger, 1994a).

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Intelligent Organizations 139

and the milieu in which it operates. But whichvariables de®ne adequate performance?

Traditional corporate control models took theirbearings largely or exclusively from the goal ofpro®t. It has been demonstrated that such modelsno longer meet today's requirements (GaÈlweiler,1990; Schwaninger, 1989). This is not a dismissal ofpro®t ± there is no doubt that pro®t is a necessaryprerequisite for a ®rm to stay in business. Theclaim here is a different one: management modelsare insuf®cient if they leave out the pre-controlswhich ultimately generate or obstruct pro®tabilityand ®nally liquidity. Under the evolutionarypressure of increasing complexity and turbulencea more sophisticated view of the criteria ofcompetent management has emerged.

These are rather de®ned in terms of a com-prehensive organizational ®tness or intelligence.Pro®t, then, as an example, is an objective at theoperative level, and an outcome of pre-controlsoriginating at higher logical levels.

In this context, a model of systemic control hasbeen developed. It is based on the insight thatone and the same system must govern itself bymeans of a set of control variables which belongto different logical levels: the levels of opera-tive, strategic and normative management(Schwaninger, 1989; GaÈlweiler, 1990). Thisimplies possible (and probable) contradictionsbetween these control variables.

As shown in Figure 1, there are interrelation-ships between these levels. Particularly, thecontrol variables of the higher logical levels exerta pre-control in¯uence on those of the lowerlevels. This has been outlined and speci®edelsewhere for the case of business organizationsin a more detailed way (Schwaninger, 1989,1993). Pre-control is about the anticipative crea-tion of prerequisites at a higher logical level,which largely predetermine what can beachieved in terms of control and performance,by the lower logical levels of management (cf.Schwaninger, 2000).

3.1. Operative Level

The general goal at the operative level is to createvalue, i.e. bene®ts for the stakeholders of an

organization (particularly customers, personneland owners). Speci®c control variables to achievethis are customer bene®t, social and ecologicalbene®ts and shareholder value.

The traditional steering models of ®rms, forexample, were almost exclusively orientedtowards pro®t and liquidity. However, pro®tbehaves in an inherently short-term mode, andits level is largely predetermined by parametersof another nature (just as liquidity is largelypredetermined by pro®ts). Similarly, a customerbene®t derived from a product or service hingeson prerequisites which must be fully available in,and therefore built up well ahead of the`moments of truth' (Carlzon, 1988), i.e. whenproduction and delivery take place.

Good managers have always known that theattainment of operative goals is bound topreconditions that have to be created in advance.Practitioners and writers in many domains ofmanagement have become aware of this, increas-ingly. Tentatives have been made, to link theoperative and the strategic logic, e.g. in produc-tion (Underwood, 1994), logistics (Bowersox andCloss, 1992) and marketing (Kotler, 1994).Beyond that, however, there has emerged acomprehensive theory, which provides accessto the relevant higher-order variables of control.

3.2 Strategic Level

The values which a company can generate arelargely predetermined by the value potentialscreated beforehand. Value potentials are de®nedas the set of all applicable business-speci®cprerequisites (e.g. in the form of resources,capabilities, core competencies) that must beful®lled when value is to be provided (inextension of GaÈlweiler, 1990). These representoperational and calculable categories. Theirpatterns of behaviour can be foreseen andin¯uenced (controlled). Value potentials must becontrolled separately from value, based onindependent criteria.

Research on strategic management has clar-i®ed the nature of these criteria and shown, forinstance, how to apprehend the critical successfactors (such as market share, relative market




GoalsLogical Levelsof Management

NormativeManagement

OperativeManagement

ValuePotentials

Value

StrategicManagement

e.g.system ethosidentity & visionsystem dynamicssystem structuresystem culture

e.g.core competenciescustomer problemproblem solutionstechnological substitutioncritical success factorscompetitive positioncollaborative position

e.g.customer benefitprofit, cash flowcompany valuesocial benefitecological benefit

Viability/Development

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Orientators/

Design ParametersControl Variables/

Dimensions of Organizational Fitness

Legitimacy("to fulfil a purposeat the service of a larger whole")

Effectiveness("to do the right things")

Efficiency("to do things right")

Figure 1. A model of systemic control

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share, quality/customer bene®t, speed, ¯exibil-ity etc.) in a given business system (for detailssee Buzzell and Gale, 1987). With the help ofthe PIMS database and a statistical toolbox forquantitative analysis related to it, valuableconclusions about the strategic position of abusiness and the actions to be taken can bederived10. However, such a calculus remains inthe domain of extant value potentials and istherefore of limited usefulness in turbulentenvironments.

The management of new value potentialsincludes changing established patterns, takinginto account the dynamics of customer pro-blems,11 problem solutions (i.e. products/ser-vices),12 technological substitution, along thevalue chain, or in the value-generating network,respectively. This involves a sustained long-termeffort for innovation, and it often requires aredesign of the business system. Hamel andPrahalad (1994) have emphasized that too muchof strategic efforts rests on established modes,while the essence of genuine innovation isreframing the reference system completely,which often leads to the emergence of newmodes of doing business, creates new opportu-nities and may reshape entire industries.

For strategic business units a mature stra-tegy methodology has become accessible. Thismethodology has made more transparent andcontrollable the essential variables of the strate-gic level ± as, a long time ago, bookkeeping didfor the operative domain. GaÈlweiler (1990), forthe most part, but also Porter (1980, 1985),Schwaninger (1987, 1989) and other authors haveelaborated on this methodological concept. The

support for strategy at the corporate level hasgrown into a relatively mature methodology aswell (PuÈ mpin, 1991; Hamel and Prahalad, 1994;Schoemaker, 1992), although the heuristic devi-ces available must remain more general andabstract here. The main idea is building andstrengthening core competencies to ensure newvalue potentials.

Long-term empirical evidence and solidconceptual re¯ection (cf. Utterback, 1994;Christensen, 1997) cogently suggest that organi-zations must consistently embrace innovation,even when this appears to undermine traditionalstrengths. The respective authors plead forcontinually renewing core capabilities, whileabandoning the logic of past successes: innovat-ing incrementally is not enough, because in thelong run the regeneration of a corporation'sbusiness relies on radical innovation. A `strategicarchitecture' is needed, `that is less concernedwith ensuring a tight ®t between goals andresources and . . . more . . . with creating stretchgoals that challenge employees to accomplish theseemingly impossible' (Hamel and Prahalad,1994, P. 23). In the language used here, therequirements of building up new core compe-tencies to ensure new value potentials maycontradict those of extant value potentials, butin the long run it must have priority.

To resume, in broad outline, pro®t is not astrategic control variable, and consequently not astrategic goal either. Rather, its appearance orabsence is a consequence of good or bad stra-tegies. This divergence from the traditional view,which regarded pro®t (or other monetary valuesstatically related to it) as the fundamentalcorporate objective, has also been expressed toa certain extent in more recent attempts tointegrate ®nance theory with strategic consi-derations. The methodologies developed forassessing the shareholder value of companiescalculate net present value, which is derivedfrom discounted future free cash ¯ows, acorporation can potentially generate at a certainpoint in time, in function of possible strategies(cf. Rappaport, 1997; Copeland et al., 1994). Thecrux in these assessments is not ± as it mayseem ± the calculus, which relies on moresophisticated accounting techniques, but the

10The PIMS (Pro®t Impact of Market Strategy) database is the mostextensive database in the world for strategy analysis and research. The`academic' core of the database contains complete and validateddatasets on more than 3000 business units. Datasets include ®nancialdata as well as information on competitive environments, customers,markets and operations. The database and related statistical tools weredeveloped and are maintained by the Strategic Planning Institute,Cambridge, MA.11I prefer the term customer problems to customer needs, because, inprinciple, the value for a customer is more sustainable if a problem issolved superbly than if merely more or less ephemeral needs arecovered.12With regard to longer time horizons, a very powerful orientator isthe solution-invariant de®nition of (manifest or latent) customerproblems posed in relation to solutions that are (a) currently available,(b) still in the development phase and (c) potentially available, i.e. stillin the research process (cf. GaÈlweiler, 1990).




proper knowledge of the variables pre-control-ling pro®ts, and their interrelationships.

3.3 Normative Level

Meanwhile, insights into the referents of norma-tive management have also improved. Theresearch which has led to this is primarily basedon systems theory and cybernetics and oncemore presents independent criteria for theassessment of the viability and development oforganizations. Viability, understood as the abil-ity to maintain a separate existence (Beer, 1979,p. 113), i.e. a distinct con®guration which makesa system identi®able as such, can be assessed onthe grounds of structural considerations whichare not bound by the orientators of the strategicand operational levels.

To date, the most advanced theory for assessingthe viability of an organization in functional termsis Stafford Beer's VSM ± to be outlined in Section4. This model is an excellent conceptual device fordiagnosing and enhancing the viability of anorganization, independent of the steering criteriaof the lower levels (strategic and operative).

As far as the soft factors of organization areconcerned ± referred to under the commondenominator of culture ± some models have beenelaborated which, for the time being, appearmore appropriate for description and diagnosisthan for design purposes (e.g. Deal andKennedy, 1982; Schein, 1985; Frank and Fahrbach,1999). Beyond that, the emerging paradigms ofthe learning organization (cf. Argyris and SchoÈn,1978; Senge, 1992) and of organizational knowl-edge (cf. Nonaka and Takeuchi, 1995) are aboutto outline a developmental and transformativeorientation to structure, process and culture.

From a systemic point of view, however, anorganization must and should aim at viabilitybeyond survival. Systems thinkers have becomemore interested in designing evolving structures,in which an organization's identity may com-pletely change, than in sticking to viability in thenarrow sense; that after all, has often led to theself-maintenance or self-production of systemswhich show a dysfunctional behaviour vis-aÁ-visthe larger wholes into which they are embedded.

This negative effect on the larger whole isreferred to sometimes as pathological autopoiesis13

(Beer, 1979). Progressive managers are increas-ingly adopting a systemic viewpoint in whichthey enlarge their reference system, eliminatingnarrow boundaries: this is corroborated by thegrowing rate of economic, juridical and struc-tural transformations of companies with the aimof creating new viable organizational entities.Development in the sense used by Russell Ackoffis a good term for such viability beyond survival.

At the level of development ± de®ned as asystem's growing ability and desire to ful®l itsown and others' needs (after Ackoff, 1994, p. 65) ±the quest of an organization is in fact viabilitybeyond survival. At this level, it can becomedif®cult to operationalize substantive indicatorsof effectiveness. Yet, social system theoriesprovide important insights to diagnose a sys-tem's propensity for development, as a functionof its ethos (e.g. openness), its identity, and thepattern of a system's dynamics: criteria such ascatalytic reinforcement, instability, consensus,self-governance and organizational learning helpto judge whether a change process quali®es asdevelopment or not (cf. Etzioni, 1968; Jantsch andWaddington, 1976).

In sum, the ®eld of indicators at the normativelevel is multifaceted. Social, political, culturaland ecological aspects have to be taken intoconsideration. Adequate space must be given toethical and aesthetic concerns, for the pursuit ofideals such as beauty, truth, good and plenty(cf. Ackoff, 1981). Multiple constituents andviewpoints ascribe different purposes to a socialsystem, which leads to varying preferencesconcerning the criteria of organizational ®tness(cf. Espejo and Schwaninger, 1993). For anorganization to be viable in the long run, thelegitimate claims of these different stakeholdersmust be matched14 (cf. Kotter and Heskett,1992).

13Pathological autopoiesis, as used here, is the self-maintenance orself-production of a system despite (over the long term) a conse-quently negative balance of its effects on the larger whole.14The fact that con¯icts between stakeholders' claims do arise andways of dealing with them have been addressed elsewhere (e.g. inFreeman, 1984; Meyer and Zucker, 1989; Janisch, 1992; Wheeler andSillanpaÈaÈ, 1997).




The concept of control which applies at thelevel of normative management is in a certainsense incompatible with the understandingderived from traditional sciences: instability isno longer a feature to be eliminated completely.In a sense and to a certain extent it is a necessaryand valuable precondition for development(cf. Prigogine, 1989); (self-)control must never-theless maintain instability within acceptablelevels and frequencies. The coming turbulentdecades will increasingly demand for control bydevelopment, control by learning or control bytransformation.15

3.4 Relationships Between the Three Levels

So much for a survey of the goals and controlvariables at each one of the logical levels. It mustbe noted that they cannot be compared in everyrespect, since they belong to three differentlogical levels; ultimate consistency can beachieved within, but not between, these levels.16

The variables regulated at one level are the pre-control parameters for the next level down.

Figure 1 illustrates that operational, strategicand normative management are by no meansthree subsystems detached from each other;rather, each higher level envelops those belowit. However, a rigid view of this embedmentwould be too static. If a normative frameworkexpresses a certain identity, this encapsulates ahuge set of possible strategies. Nevertheless, at acertain stage, strategy making may ®nd newways of relating to the environment, which mayreach out beyond the borders of the identityde®ned by the actual normative framework. Inmany companies, such attempts are out of thequestion a priori ± a trait which sooner or laterturns out to be pathological. Even the distinctivefeatures of an identity and its normative implica-tions must be reviewed over time. Most indus-tries are subject to fundamental change;

boundaries between industries collapse, so orga-nizational intelligence demands reinventing thecompany, abolishing (unlearning) outdated reci-pes of success and building new competencies.Constant creative tension between normativemanagement and strategy making are necessaryfor a company to evolve. The pertinent connec-tion is not an algorithmic one, but it must expressitself in a strenuous process of organizationaldiscourse. In a large study, Collins and Porrashave given an empirical account of this `dynamicinterplay between core ideology and the drivefor progress' (Collins and Porras, 1994, p. 85).

Figure 1 further demonstrates that the relevanttime horizon increases from operational tonormative management. At the same time, thefactual horizon is also extended, as is the com-plexity, which is to be coped with. The dottedarrow indicates that certain principles relevantto normative management (e.g. ethical andaesthetic ones) are largely timeless.

The diagram also shows that the concerns ofthe higher levels are not detached from those ofthe lower ones. A company can only survive if itis in possession of value potentials that areactualized, i.e. converted into value. Equilibriumbetween the sacri®ces incurred in building upvalue potentials and reaping their fruits is afurther necessary precondition of viability whichnormative management has to ensure.

3.5 Criteria of Sytemic Effectiveness

At the three levels of management, differentcriteria of organizational ®tness ± or, to speak moregenerally, systemic effectiveness ± apply:

(1) At the operative level, the criterion is that ofef®ciency, mainly in terms such as quality,productivity and pro®tability.

(2) At the strategic level, it is effectiveness in boththe competitive and the co-operative sense.

(3) At the normative level it is legitimacy, de®nedas the ability to ful®l the claims of all relevantstakeholders.

In other words a different language is needed fordealing with the issues of each level; each one ofthem obeys a distinct logic.

15The terms in italics should be read with the pre®x self-, i.e. as self-control by (self-)development, self-control by learning, self-control by (self-)transformation, to indicate the priority of intrinsic control (or eigen-control) over extrinsic control.16In logical terms, the strategic level offers a metalanguage to theoperative, the normative to the strategic and the operative levels.




The key duty of an integral or systemic man-agement is to meet all three requirements in thelong run. In order to achieve such a delicate taska corporation will require ± as has been illu-strated in detail in Schwaninger (1993) ± con-siderably higher-developed mental models thanestablished ones, and more complex control sys-tems than the simple feedback systems tradi-tionally used.

The hierarchy of control variables delineatedabove results in a multilevel control structure(Figure 2), which clari®es that one and the samestate of affairs cannot be pre-controlled by meansof the variables by which it is controlled17. If, atthe operative level of a ®rm, control is, forexample, exercised in the interest of pro®t ± bymeans of revenues and costs ± then pro®t cannotbe pre-controlled by means of these traditional

accounting variables. For pre-control other kindsof referents are required: extant and new valuepotentials, which in turn are pre-controlled byviability and development. In Figure 2 thisrelationship is represented by the solid lines,which connect each cycle with the one immedi-ately before it. A closure of the hierarchy ofcontrol variables is provided insofar as theoutcomes at the operative level not only resultfrom higher-levels pre-controls, but also theypre-control higher-level parameters in a speci®csense. For instance, not only the innovativecapabilities but also the actually available liquid®nancial resources might play an important rolein the building-up of value potentials: at least,substantial own funds can add a degree offreedom to it.

4. THE VIABLE SYSTEM MODEL (VSM)

Organizational cybernetics conceives manage-ment in terms of coping with complexity. If the

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Figure 2. Integral Management as a multilevel control cycle, (abridged diagram for a recursion level y)

17It has been argued (cf. Jackson, 1989, p.428) that the use of controlmodels prevents organizational learning, leading to `increasingdominance of history' (de Zeeuw, 1986, p.139). A concept of controlthat embraces development as a goal de®es this argument in principle,although it cannot guarantee that there will be learning in everyorganization striving for development.




former section dealt with the control variables tocontend with that complexity, the question arisesnow, how an organization must be structured tomake its (self-)control and (self-)developmentpossible. Stafford Beer, the founder of manage-ment cybernetics, offers a model for that pur-pose.

A set-theoretic model (Beer, 1994a), in whichhe de®ned the organizational prerequisites forthe viability of systems, was later operationa-lized in a topological model, known as the VSM(Viable Systems Model) (Beer, 1979, 1981, 1985). Inthis model, a set of functions is distinguished,which provide the `necessary and suf®cientconditions' (Beer, 1979) for the viability of anysocial system ± organizations in particular(Figure 3). These functions and their interrela-tionships are speci®ed in a comprehensivetheory, the propositions of which can be sum-marised as follows:

(1) An organization is viable if and only if itdisposes of a set of management functionswith a speci®c set of interrelationships,identi®ed and formalized in the model:

* System 1: Regulatory capacity of the basicunits (A,B,C,D), autonomous adaptation,to their environment, optimization ofongoing business (e.g. the business areasof a company).

* System 2: Ampli®cation of self-regulatorycapacity and attenuation to damp oscil-lations and coordinate activities viainformation and communication (e.g. info-rmation systems, service units and coor-dination teams, standards of behaviour).

* System 3: Establishment of an overalloptimum among basic units, providingfor synergies, as well as resource allocation(e.g. the executive corporate management).

* System 3*: Investigation and validation ofinformation ¯owing between Systems 1±3and 1±2±3 via auditing/monitoring activ-ities (e.g. operations analysts, special stu-dies and surveys).

* System 4: Dealing with the future, espe-cially the long term and with the over-all outside environment, diagnosis andmodelling of the organization in its envir-onment (e.g. corporate development, strat-egy, research and knowledge creation).

* System 5: Balancing present and future aswell as internal and external perspectives;moderation of the interaction betweenSystems 3 and 4; ascertaining the identityof the organization and its role in itsenvironment; embodiment of supremevalues, norms and rules ± the ethos of thesystem (normative management).

In this structure, the primary units (basic unitswith the regulatory capacity supplied by System 1)must dispose of high autonomy in order to beable to adapt to their respective environment ormilieu. The combined activities of Systems 1, 2and 3 (including 3*) provide for management ofthe present and short term, while System 4 is thefulcrum for long-term adaptation, and System 5the embodiment of the ethos ± the basic prin-ciples governing the orientation of the organiza-tion as a whole.

Systems 1±2±3 (including 3*) comprise theoperative level, System 4, in interaction withSystem 3, the strategic level, and System 5 the

5

3

A

B

D

1A

1B

1C

1D

24 3

C

Future

3*

Environment/Milieu

"Meta-System"

Figure 3. The Viable System Model - Overview18

18This is a slightly adapted version. For the full-¯edged original, seeBeer (1985, p.136) and Beer (1979, 1981).




normative level of management (cf. Model ofSystemic Control in section 3).

(2) Any de®ciencies in this system, e.g. missingfunctions, insuf®cient capacity of the func-tions, faulty communications or interactionsbetween them weaken or jeopardize theviability of the organization.

(3) The viability, cohesion and self-organizationof an enterprise depend upon these functionsbeing recursively working in all levels of theorganization. A recursive structure com-prises autonomous wholes within autono-mous units. Moreover, a viable organizationis made up of viable wholes and it is itselfembedded in more comprehensive viablewholes. Each unit, inasmuch as it is produ-cing the organization's task, rather thanservicing or supporting this producing,replicates ± in structural terms ± the totalityin which it is embedded: It has all thefunctions outlined under (1), to be able tomanage, from start to ®nish, the processes forthe purpose of which it exists. If we take sucha viable organization as a system-in-focus,depending on the perspective adopted, it`may have more than one next higher andnext lower recursion` (Beer, 1985; for apertinent application, see Leonard, 1989).

The VSM has been transduced into the languageof private and public ®rms and has been widelyapplied, as documented in several books (e.g.Espejo and Harnden, 1989; Espejo and Schwa-ninger, 1993; Espejo et al., 1996), and on a CD-ROM edited as a festschrift for Stafford Beer(Espejo and Schwaninger, 1998).

5. THE TEAM SYNTEGRITY MODEL (TSM)

While the two models outlined up to now add-ress the issues of control and design, the TeamSyntegrity model is a structural framework tofoster cohesion and synergy in larger groups ofindividuals, or the transformation of mere agg-regates of individuals with similar interests, intoorganizations with their own identities. StaffordBeer (1994b) invented it. It is a future-orientedapproach to the design for democratic manage-

ment in the sense of the heterarchical±participa-tive type of organization (cf. Schwaninger,1996). The TSM is a holographic model fororganizing processes of communication, in par-ticular for the (self-)management of social sys-tems, in a non-hierarchical fashion. This modelcan be mathematically shown to be optimal interms of the distribution and sharing of know-ledge in large group settings (Beer, 1994b). Basedon the structure of polyhedra it is especiallysuitable for realizing team-oriented structuresas well as for supporting processes of planning,knowledge generation and innovation in turbu-lent environments. This applies mainly tonumbers of people transcending the size offace-to-face groups, the limits of which are givenby `the magical number seven, plus or minustwo' (Miller, 1967).

The formation of networks by persons indifferent locations, who are connected by mutualinterests, is a manifestation of the informationsociety and a structural answer to challenges ofour time. An infoset is de®ned as a set ofindividuals who share a common concern, andwho are in possession of pertinent information orknowledge connected with the issue of interest,as well as motivated to tackle it. The TeamSyntegrity model19 supplies the structural frame-work for a synergetic interaction of such aninfoset. The purpose of that interaction is toentail an integration of multiple topics andperspectives towards a shared body of knowl-edge, and hopefully the emergence of newknowledge in the process.

The term syntegrity results from a combinationof synergy and tensile integrity. Synergy is thecooperation of actors, producing a combinedeffect greater than the sum of their individualeffects. Tensile integrity is the structural strengthprovided by tension, as opposed to compression(Fuller and Applewhite, 1982).

In the following, the architecture of the modelwill be illustrated by using the structure of anicosahedron (Figure 4), which is the most complexof the regular, convex polyhedra, also referred toas `Platonic solids'. The icosahedral structure isone of the the structures frequently used to

19For details see Beer (1994b).




organize syntegration events. It applies to thecase of 30 participants; for different numbers ofpeople, solutions based on other polyhedra (e.g.modi®ed icosahedron, octahedron) are possible.

Each member of the infoset is represented byone edge of the icosahedron. Five edges lead toeach vertex, i.e. there are ®ve players to eachteam (as players). An icosahedron has 12vertices; different colours mark each of those.Thus each participant as a player belongs to twodifferent teams ± those connected by the edgethat represents him or her. Mrs Red±Yellow, forinstance, belongs to the teams (! vertices) Redand Yellow. At the same time she is acting as acritic to two other teams (e.g. Black and Silver,which are next neighbours). This means that eachteam consists of ®ve players and ®ve critics.Altogether, the 30 agents ful®l 120 roles: 30 timestwo roles as a player and two as a critic. Inaddition there is the observer role: any memberof the infoset can attend ongoing workingsessions of other teams, at the times he or she isnot involved in discussions of the teams they arepart of.

The polyhedral structures used for TeamSyntegrity dissolve the paradox of peripheralityversus centrality of actors in an organization (asformalized by Bavelas, 1952): while peripherality

leads to communication pathologies, alienationand low morale, centrality is needed for effectiveaction. However, as a group grows, centrality canonly be bought at the cost of increasing periph-erality (Leonard, 1995). Team Syntegrity enablesan infoset to acquire centrality via a reverberativeprocess, although the peripherality of each one ofits members equals zero, i.e. there is no periph-erality at all.

A process of syntegration typically has thefollowing phases (this is a simpli®ed outline):

(1) Opening: The syntegration is dedicated to ageneral topic that focuses all mutual effortsand is explicated by an opening question. Insyntegrations realized with students at theUniversity of St Gallen, the question was:`How should management education be designedin the future?'

(2) Generation of the agenda (`Problem Jostle'): Eachparticipant hands in contributions that seemimportant to him or her (Statements ofImportance). In the following steps, theseare discussed and combined (AggregatedStatements of Importance). Then, in a processof successive synthesis through discussionand voting, an agenda for the actual work onthe general topic or problem is generated(Hexadic Reduction). This is ®nallyexpressed in 12 topics (Consolidated State-ments of Importance).

(3) Assignment to groups (`Topic Auction'): Eachmember of the infoset ranks all 12 topics on apreference form. These are entered into thecomputer and an optimization algorithmassigns the membership for a topic. Analternative would be random assignment ofmembership to the edges linking the verticesof the polyhedron (i.e. topics).

(4) Working on the topic (`Outcome Resolve'): Theindividual teams (consisting of ®ve playersand ®ve critics each) explore their respectivetopic. Each team meets several times (usuallyin three iterations) and writes up a summaryof its results to share with the whole info-set. The fact that the same issue with itsdifferent but interconnected aspects is con-tinually and iteratively processed by thesame set of people, who gather in alternating

Figure 4. Icosahedral structure of the Team Syntegritymodel




compositions (topic teams), implies strongreverberation. This leads to a self-organizingprocess with high levels of knowledgeintegration. There is no need for a centre tointegrate the multiple efforts; integration justhappens `by itself'.

It can be shown mathematically that this isa geometrically ergodic process, in whichthe eigenvalue20 of the process convergesto a minimum: 90% of the information inthe system will be shared after threeiterations, and 96% after four iterations(Jalali, 1994, p. 277).

(5) Finalization: The teams present their conclu-sions in a ®nal plenary session. Planning forsubsequent action or other coordinativemeasures may be added as necessary.

Despite its newness, Team Syntegrity has beenemployed in approximately 140 syntegrationevents (as calculated per the end of 2000).21

Examples of applications have a wide range; thefollowing list is non-exhaustive:

* planning processes in universities, a polytech-nical institute and a hospital;

* organizational change in two Swiss banks;* strategic management in industrial ®rms;* governmental agencies in Canada;* regional and community planning;* non-pro®t organizations;* reorganization of a political organization in

Great Britain;* preparation for peace negotiations;* seminars and workshops with students and

researchers.;

Between 1995 and 1996, the ®rst electronicsyntegration of an infoset distributed over theworld was realized. A group of 30 cyberneticiansfrom 16 countries and four continents engaged indistributed interaction (mostly via the WorldWide Web and electronic mail), with a localsyntegration in England, mid-way in the process,to produce a festschrift for Stafford Beer (for adetailed account, see Schwaninger, 1997, 1998).The outcome of this process ± an electronic

medium ± has been published on a CD-ROM(Espejo and Schwaninger, 1998). In this case, thepotential of Team Syntegrity to create neworganizational forms was shown: a new protocolfor the cooperative development of knowledge-intensive products in distributed settings hademerged.

At this stage, there seems to be no otherequally powerful model to systematically fosterdeep involvement, self-organization and theemergence of collective consciousness of largenumbers of people.22 Sociometric studies haveascertained signi®cant increases of differentmeasures of cohesion between the beginningand the end of the respective syntegrationevents (cf. Hechenblaickner et al., 1995; Espejoand Schwaninger, 1998; Baer and Schwaninger,1998). Furthermore, exploratory investigationshave highlighted the phenomena of reverberation,self-organization and self-reference in syntegra-tion events (Beer, 1994b; Espejo and Schwaninger,1998; Ahmad, 1999). There is also substantialevidence that the structural arrangement fostersconceptual learning; the conceptual mentalmodels of participants are enriched as the processevolves. Finally, new qualities of shared know-ledge and a collective consciousness or identityare likely to emerge (cf. Schwaninger, 1998).

Team Syntegrity is not the model to be appliedto all kinds of group endeavours. It ratherprovides a methodology to maximize the effec-tiveness of interaction and communication oflarge groups dealing with complex issues or ill-de®ned problems, which require knowledge ofdifferent kinds or disciplines. Most of the appli-cations enumerated above were in the domainsof strategic and normative management, andresulted in a high degree of knowledge conver-sion or knowledge generation (cf. Nonaka andTakeuchi, 1995). As tacit and explicit knowledgeinteract, for which syntegrations provide ampleopportunity, the creation of new knowlegebecomes possible and innovations are morelikely to take place (Nonaka and Takeuchi;1995). The strategy syntegrations realized have

20The formula to calculate the eigenvalue is: y � �1= ��5p �n, with n

denoting the number of iterations.21Information from Team Syntegrity Inc., Toronto, 10 November, 2000.

22Comparative studies to assess the degrees of effectiveness ofdifferent methodologies for communication and interaction in largegroups are still to be accomplished.




shown many cases in point (e.g. Espejo andSchwaninger, 1998; Ahmad, 1999).

TSM was aimed at making an optimal designfor the communications processes in the homeo-stat of Systems 3±4 in the VSM (see Section 4)available. The evidence reported here underpinsthis conceptual link between the two models,VSM and TSM. The Stafford Beer festschriftproject, brie¯y outlined above, was an ongoingsyntegration with a duration of one year, withonly one local syntegration, preceded and fol-lowed by ®ve to six months of electronicsyntegration. The results of that venture lendsupport to the assumption that ongoing orrepeated syntegrations could prove to be a usefulmode of organizing the continuous dialogue onstrategic issues in organizations.

6. OUTLINE OF AN INTEGRATIVEFRAMEWORK

In this section, a framework, which I call Frame-work for the Design of Intelligent Organizations, will

be presented (Figure 5), which integrates thethree models expounded up to here23.

6.1 Overview

This framework builds on a set of speci®c notionsof systemic management:

(1) The proposed framework is integrative ± inwhat respect? In contrast with many frame-works which emphasize partial aspects oforganizations ± e.g. strategy, structure ororganization culture ± the emphasis in theone proposed here is on bringing togetherthe different components so as to provide amore complete picture. Integration ± themaking up or composition of wholes ± is anatural capability of humans, largely basedon unconscious inferences (cf. Gregory,

"ParadigmaticChange" Behavior

CultureCapabil i ties

EthosI denti tyV ision

Str uctur eProcessesSystems

- Reshaping Profile & Thrust- Revision of Pr inciples, Goals and Rules- Developing Core Competencies- Reconfiguring & Renewing Activities

- Structural Change- Redesign of Processes and Management Systems- Management of Resources- Shaping Infrastructure

- Reframing (New Models, Insights and Language)- Revitalizing (Developing Capabil ities)- Empowerment (Enabling People)- Energizing (Building Cohesion and Join

t

Action)

Activi t iesCorp. Policy

Strategy

t im e

Figure 5. A Framework for Intelligent Organizations

23An earlier version of this framework was elaborated in Schwaninger(1995) and published in Espejo et al. (1996). It built on earlier works inthe context of the St Gallen Management Concept, namely Krieg (1985)and Bleicher (1999).




1987, p. 375). However, in the face of thecomplexity of real-world phenomena aproneness to reductionism and fragmenta-tion of models has become widespread. Thepresent framework is a device to overcomethis limitation. It is made up of an inte-grated set of essential parameters and theiridenti®able interrelationships, which haveto be developed in co-alignment, to enha-nce organizational intelligence. Thereby itdoes more than merely furnish a list ofimportant aspects. It provides a frame ofreference, which is robust, broad enoughand suf®ciently structured, to enableactors to initiate and catalyse organizationaldevelopment and transformation moreeffectively.

(2) The essential parameters which make up theframework can be designed, within limits.Certain aspects of design must take indirectways; e.g. proper in¯uence on behaviour istaken, rather via the design of rules forinteraction, appropriate structures etc., thandirectly (see also 6).

(3) The framework is multidimensional. In thescheme, ®ve crucial dimensions are com-bined. Three of them ± activities, structureand behaviour ± are the dimensions thatmake up the pillars of the St Gallen Manage-ment Concept, an architecture for structuringmanagement issues, developed at the Uni-versity of St Gallen (cf. Bleicher, 1999) . Thefourth dimension is made up of fundamentalparameters, such as organizational identity,ethos and vision. The ®fth dimension is time.

(4) In logical terms, management is conceived asa multi-level process with:

* normative management ful®lling thefoundational function, embodied by Sys-tem 5 in the VSM;

* strategic management, the orientationalfunction, embodied by System 4 and theinterrelationship between Systems 3 and 4in the VSM;

* operative management, the function ofrealization, embodied by Systems 1, 2 and3 (including System 3*) and their inter-relationships in the VSM.

(5) Management is conceived as a recursiveprocess. In principle, the whole schemeapplies to any level of recursion of anorganization, although some of the termsmay contain a certain bias towards the higherlevels of recursion.

(6) The components, which constitute the frame-work, are dynamically interrelated, as visua-lized in Figure 5. The terms in the diagramgive an overview of the domains in whichmanagement/leadership can in¯uence theessential parameters and thereby catalyseorganizational transformation. The dynami-cal interrelationships between these compo-nents call for balanced interventions and athorough consideration of possible chainreactions and side effects.

6.2. Dimensions of the Framework

The activities dimension describes the ensemble ofintended operations of or actions taken by anorganization. In this dimension, the emphasis ofchange is on reshaping pro®le and thrust, and onrevising principles, goals and rules that governthe behaviour of the organization both internallyand in relation to its environment. Here we also®nd the challenges of developing core compe-tencies and of renewing or recon®guring activ-ities. The structural dimension is about thearrangement of relatively stable mutual relation-ships between the elements or components of anorganization. In this context, the levers oftransformation are structural change, the rede-sign of processes and management systems, themanagement of resources ± particularly people,knowledge and time ± and, in many cases, areconsideration of the composition of the team.The dimension of behaviour describes the pattern ofactual or desired qualitative features of conduct,which are characteristic of an organization or itssubsystems The spectrum of potential impulsesfor transformation in the behavioural±culturaldomain can be subsumed under categories suchas reframing, revitalizing, empowering andenergizing.

Finally, those essential parameters which arefundamental to all organizational activity, and




which are subsumed under terms such asidentity, ethos and vision, are, in a sense, mostpowerful levers of change, which impinge on allthree domains: activities, structure and beha-viour. Therefore they have to be re¯ectedcontinually in a self-referential process, andrevised, if necessary.

Intelligent organizations conceive their viabi-lity in a broader way than in the sense of meresurvival at any price, or of autopoiesis, i.e. self-reproduction. Ultimately, they adhere to the goalof development. In extreme cases they evendisband, if they can no longer make a signi®cantcontribution to the larger whole (cyberneticallyspeaking: at the service of the systems of thehigher recursive levels, in which they areembedded). From there, they may recon®gurethemselves anew, develop a distinct identity orbecome part of a different system. This inclusionof the principle of (self-)development into amanagement model (see Model of SystemicControl, Section 3) is a conceptual prerequisitefor self-renewal ± an essential characteristic ofintelligent organizations. In the future, control bydevelopment, control by learning and control bytransformation will increasingly be required; eachof these kinds of control being a mode of self-control. Continuity through discontinuity canbecome a sound organizational principle undercertain circumstances (as speci®ed above).

A virtuous transformation leading to evermore vigorous viability and developmentrequires synchronous evolution and transforma-tion in all three domains ± activities, structureand behaviour,24 in alignment with the fourthdimension ± the underlying fundamental para-meters named.25 The re¯ection and developmentof the latter is an additional prerequisite of ahigher order. In other words, also the concepts oforganizational identity, ethos and vision aredynamic ones (cf. Gioia et al., 2000).

Isolated, unidimensional non-aligned or asyn-chronous changes in any one of these dimensions

are in principle less robust and subject to failuremore easily. The delicacy of managing a trans-formation is in large part due to the fact that thetime constants inherent in each one of thesedomains are different. Strategies can often bereinvented quickly, whereas structural transfor-mation takes more time. The variables that reactmost slowly are the behavioural ones.

6.3 Integrating the Dimensions and Models

The three models outlined in sections 3±5 can inprinciple leverage and facilitate organizationaltransformation substantially, if they are used inan integrated and synchronized manner. InFigure 6, the three models are integrated graphi-cally. The frowning analyst in me ± and probablyin many readers ± must require further elucida-tion of this rather impressionistic image. In thisrespect, two points must be made.

First, an integration of the three models isneither arti®cial nor arbitrary, as they are boundtogether by strong and cogent conceptual links(see also Figure 7).

The MSC and the VSM are intrinsicallyconnected by the equivalence of three logicallevels: operative, strategic and normative. In thecase of the MSC these are represented byrespective referents for conceiving and control-ling what the organization does, in the case of theVSM by the structure of the managementfunctions which embody these three logicallevels. The TSM is complementary to both theMSC and the VSM. It was conceived as amethodology for the optimal design of commu-nications and interactions in the managerialmetasystem of organizations (Systems 3/4/5 interms of the VSM, in particular the homeostat ofSystems 3 and 4, in which the checks andbalances between `inside and now' and `outsideand then' occur). This design turned out to benecessary: on one hand, the number of peopleinvolved in the issues at stake in such ametasystem usually transcend the size of face-to-face groups. On the other hand, there was notheoretically well-founded protocol available toprovide for an optimal design of communica-tions in large groups (cf. Beer, 1994b).

24For some empirical evidence ± even though collected in morespeci®c domains ± to support this argument, see Pettigrew and Whipp(1993) and Rudolph (1999). See also footnote 24.25These fundamental parameters can be operationalized by means ofconstructs such as values, norms or lead distinctions, which are logicallysuperordinate to the distinctions drawn in the three other dimensions.




These inherent logical relationships provide anaturally integrative force, which may not berecognized by outside observers who are un-familiar with the links made explicit here. It canbe imputed that the effectiveness of anycombined application will signi®cantly dependon the knowledge of these relationships onthe parts of the key actors, particularly thefacilitators involved in respective projects oforganizational transformation. It must beadded that a combination with other modelsis not in principle excluded from consider-ation. Also, in practice, methods and methodol-ogies not explicitly speci®ed here willnecessarily be included in the toolboxes ofchange agents and facilitators of organizationaltransformations.

The second point is that each one of the threemodels outlined has a strong link to one of thedimensions of the framework:

(1) The aspect of activities: The Model of SystemicControl furnishes a frame of referencewhich supports an integral (self-)control.It helps agents to distinguish between thethree logical levels of management andorients them in keeping the steeringvariables of all three levels under controlsimultaneously, even if contradictionsoccur.

(2) The aspect of structure: The Viable SystemModel is a highly powerful device to diagnosean organization and to design it in a way thatthe self-control to achieve viability anddevelopment can be achieved.

(3) The aspect of behaviour: The Team Syntegritymodel provides a design for developingvirtuous synergetic interactions and relation-ships in an organization. This holds inparticular for an increase of cohesion andthe generation of knowledge in multi-person

ValueValue

ValuePotentialsValue

Potentials

Viability/DevelopmenViability/

Development

ValueValue


Potentials

Viability/DevelopmenViability/

Development

ValueValue


Potentials

Viability/DevelopmenViability

Development

33

44

55

33

44

55

33

44

55

Figure 6. Integrative view of the models (I)




settings, and in the context of re¯ective andinnovative processes.

However, the utility of each one of these threemodels is not limited to any one of the dimen-sions of activities, structure of behaviour, as thisenumeration might seem to imply. On thecontrary, all three of them incorporate a systemicperspective, which to some extent also considers

the other dimensions. In addition, each one has asubstantial contribution to make concerningre¯ecting such fundamental issues as ethos,identity and vision of an organization (cf.Schwaninger, 1998).

On the other hand, organizational identity,ethos and vision can be considered fundamentalparameters insofar as they shape an organizationin a basic way. Their impact on the other

2

Code:

equivalence

logical relationships M outer circle denoting emergence of activities M inner circle denoting emergence of identity & structure

ValuePotentials

Value

Viability/Development

4

3

5

Structural embodiment of management functions(Dimension: Structure)

Logic for conceiving & controlling activities(Dimension: Activities)

Referents for Systemic ControlMetasystem of Organization

Polyhedral architecture forTeam Syntegrity

Enabler for cohesion and synergy(Dimension Behavior)

12

3

3

1

Figure 7. Integrative view of the models (II)




dimensions ± activities, structure and behaviour± is, in principle, primordial. At this stage it isalso necessary to specify how they are tied to theconcept of an intelligent organization, as for-mulated at the outset. For this purpose, it isindicated to specify brief working de®nitions foridentity, ethos and vision, and then link theseconcepts to the four criteria which distinguishintelligent organizations (see Section 1).

Identity may be de®ned as a mark of anorganization, which can be consistently recog-nized, or which persists over time (Leonard,Coming Concepts: Glossary of Cybernetic Terms,forthcoming); thereby making it distinguishableor unique. The ethos consists in the salient ethicalprinciples or the characteristic spirit of anorganization. Finally, vision, in this context,may be conceived as a highly imaginative anti-cipation of, or a complex insight into the possiblefuture of an organization. I re-emphasize that therelative persistence over time of an identity doesnot preclude that it may change, and even at afast pace, in some cases26. Neither is changeexcluded from ethos or vision; e.g. growinginsight and wisdom may lead to the emergenceof new ethical principles or to sharper anticipa-tions of desirable futures.

A speci®c set of these fundamental parametersalways enables certain modes of adaptation, whileit precludes others. For example, those ®rmswhich have established strong identities asleaders in environment-friendly problem solu-tions exclude toxic products and technologiesfrom their options to adapt to market demand.

Similarly, the modes by which a company canshape its environment will strongly depend onthese fundamental parameters. An ethos ofopportunistic reaction will provide little spacefor in¯uencing the milieu constructively. On theother hand, a strong sense of ethical responsi-

bility is often at the root of innovation andleadership by which ®rms have helped society atlarge in coping with problems such as disease orscarcity of resources. For pertinent empiricalevidence, see Collins and Porras (1994).

Furthermore, ®nding a new milieu and, ifnecessary, recon®guring itself with its environ-ment, can instil new vigour into an organization.However, such a process of renewal is risky. Avirtuous trajectory will be favoured by a strongsense of identity, e.g. to avoid the fallacy ofdisordered diversi®cation, with its potentiallydisastrous implications for competitiveness andeconomic performance (cf. Palich et al., 2000).

Finally, an organization con®ned by a narrowperspective will not be prone to making asubstantial contribution to the larger whole ofwhich it is part. The responsible leaders need asuf®ciently ample vision, which includes anunderstanding of the embeddedness of theorganization (see VSM, Section 4) and of therequirement of legitimacy for viability anddevelopment (see MSC, Section 3).

A more extensive elaboration on the potentialand the dif®culties of applying the frameworkpresented here will have to be the object offollow-on research. At this stage, I can postulate,on the grounds of provisional empirical evi-dence27, that such a systemic approach is super-ior to an approach where only one of the modelsoutlined ± MSC, VSM and TSM ± is applied orwhere several or all of them are used in a merelyadditive mode. It must be said, in the sameinstance, that the systemic nature of each one ofthe three theories, their conceptual interrelation-ships as speci®ed above, and in particular theframework proposed here, also facilitate such anintegrative application.

7. SYNOPSIS AND OUTLOOK

In this paper I have emphasized the aim ofdesigning organizations so that they can achievehigher intelligence, which implies higher cohe-sion, self-control and self-reference, and ulti-mately more vigorous viability and development.

26For example, Encyclopedia Britannica, the traditional edition andseller of the `ultimate home library', founded in 1768 in Edinburgh,weathered its greatest crisis in the 1990s. After several tentatives torevise its business model (increase of sale efforts, availability via paidInternet services) the ®rm transformed itself into an electronicinformation centre in 1999. This change has been comparedmetaphorically with the transformation of a time-honoured steam-ship into a modern speed-boat (Weber, 2000). One could argue that theidentity, in this case, has not changed fundamentally; EncyclopediaBritannica always was and remains a knowledge source. There areindeed different degrees of changes in identity.

27Cf. Schwaninger (2000), Contraloria General de la RepuÂ blica(unpublished, 1997) and Reyes (2000).




A crucial challenge which I have stressed in thiscontext is coming up with better models ±including theories, frameworks, etc. ± apt toenhance the capability of organizations to copewith the paramount and growing complexitiesthey face.

First, three models from organizational cybernetics± MSC, VSM and TSM ± have been outlined asbuilding blocks for the design of intelligentorganizations. The bene®ts of these models lie(a) in the deeper understanding of the causalstructures underlying organizational behaviourand performance, which they convey, and (b) inthe principles they furnish, for the design oforganizations to cope with complexity in a morecomprehensive way, than if supported by con-ventional management models.

Finally, a Framework for Intelligent Organizationshas been proposed. It has also been describedwith its essential features, and reference toprovisional empirical evidence has been madeto support it. Given the novelty of the frame-work, this empirical support to date has itslimitations, as far as systematic knowledge aboutthe outcomes of applications of the framework asa whole is concerned. Therefore the potentialclaimed here for the overall framework hasmainly been underlaid in a deductive mode.The empirical support given for the threeindividual models ± MSC, VSM and TSM ± ismuch stronger.

In sum, my suggestion is that (a) a virtuoustransformation of organizations can only beachieved if the dimensions of activities, structureand behaviour are developed in a balanced,synchronic mode, and (b) to excel in this end-eavour, the three models outlined have to beapplied in a combined and integrative manner ±in accordance with such underlying fundamen-tal parameters as organizational identity, ethosand vision. The latter have to be subject todevelopment in their own right.

Such a systemic use of these models can tracethe path towards superior organizational intelli-gence more effectively than merely punctualuses of any one or more of them. Also, theincorporation of ethics and aesthetics as explicitcomponents of design, as advocated here, shouldcontribute to broader-minded, less reductionist

and myopic modes of management, and ulti-mately foster sociocultural progress. On thegrounds of the arguments developed in thispaper, the proposed framework promises to be apowerful response to the needs of the new typesof intelligent organizations, which already havebegun to emerge.

ACKNOWLEDGEMENTS

The author thanks Dr Alenna Leonard, Dr OlafScherf and two anonymous referees for theirvaluable comments on an earlier draft of thispaper.

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